Pakistan Leather Garments Manufacturers and Exporters Association or (PLGMEA) explained that the clarifications is required in the draft content of Federal Government Duty Draw Back Bonds Rules 2019 issued by the Finance Ministry of Pakistan.
PLGMEA Patron-in-Chief Fawad Ijaz Khan stated Duty Draw Back Bonds Rules 2019 are to be issued to reconcile the DLTL promises of exporters with SBP (State Bank of Pakistan).
Moreover, Fawad Ijaz Khan explained, it is not obvious how the sales tax discounts will be settled. In the last meeting held with Finance Minister Asad Umar, The Pakistan Leather Garments Manufacturers & Exporters Association delegation was told that Bond Rules will be issued for settlement of both sales tax and DLTL statements.
They furthermore stated that the maturity period of proposed bonds is 3 years and members of bonds will receive 1.3 times of principal amount just after three years. Fawad said if an exporter desires to discounted this bond with any bank, the exporter will get around 89 % of the face value. While per discussion with various banks, these will commit a mark-up rate of between 13 to 14 % for discounting such a bond.
If the bank discounts it at 13.5 percentage, the value of the bond at maturity must be 1.46 times rather than 1.30 times in order for the exporter to have Rs l 00 face value. Each exporter will receive about 89 percent of face value as well as will free 11 percent in discounting these bonds.
Fawad said many exporters are performing Islamic banking as well as, therefore, there should be an option of an Islamic Bond. In this case, the Shariah should explain if such a bond can be discounted under the Islamic banking system in Pakistan.